Two phrases trip up more clients than any other in a building contract: prime cost items (PC) and provisional sums (PS). They're harmless when you understand them. They're a trap when you don't.
A prime cost item is an allowance for something that will definitely be in your home — a tap, a toilet, an oven — but where you haven't yet chosen the exact model. So your contract might say something like "Kitchen mixer tap: PC $400." If you eventually pick a $400 tap, the cost stays put. If you fall in love with a $900 tap at the showroom, you pay the difference plus the builder's margin. If you pick a $250 tap, you're credited the difference.
A provisional sum is a bit different. It's an estimate for work the builder genuinely can't price exactly yet — site excavation, structural steel, piering for soft soil. The builder is making an educated guess based on the information available. Once the actual cost is known, the difference is invoiced or credited.
Here's the part to watch. A budget-friendly contract on paper can hide an awful lot inside provisional sums and prime costs. A builder who is low-balling you knows the PC for tiles, taps and joinery will almost certainly come in higher, and they're banking on you not noticing until it's too late.
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So my advice: read every PC and PS line carefully. Ask what the figure is based on. Is the kitchen tap allowance enough to actually buy a decent tap? Is the site cut figure based on a proper geotech report, or is it a guess? Before you walk into a kitchen or bathroom showroom, take the inclusions schedule with you. You'll be staring at gold-plated everything otherwise.
Done well, PC and PS items are fine and unavoidable. Done badly, they're how a budget slowly leaks.
If you'd like a contract walk-through in plain English before you sign anything, come and see us at inh.com.au/Melbournewesternregion. As a Melbournewesternregion builder doing family homes and custom new home builds across western Melbourne, I'd rather you understand every line now than discover it later.
